- New business in special loans almost 30 % above previous year;
medium and long-term promotional loan portfolio in the balance sheet increases by 6.2 %
- Continuing favourable funding conditions
- Net interest income and operating result increase slightly;
cost-income ratio improves to 17.1 %
- Total assets reach € 77 billion
The business year 2005 once again brought a strong demand for promotional loans from Landwirtschaftliche Rentenbank, Germany's agency for agriculture and rural areas based in Frankfurt/Main. Special loans, which are granted for specific promotional purposes and assistance measures, experienced an above-average increase. Commitments for these promotional loans, which are granted at particularly favourable interest rates, grew by about 30 % to € 2,795.2 million (€ 2,154.4 million). In particular, there was a strong demand for financing renewable energy projects. Since July 2005, these loans have been provided under the newly introduced programme "Environmental Protection and Sustainability". Together with standard promotional loans for agriculture and rural areas as well as securitised lending, total new business in medium and long-term promotional lending reached € 9.6 billion (€ 9 billion). The medium and long-term promotional loan portfolio in the balance sheet grew by 6.2 % (4.9 %) to € 34.2 billion (€ 32.2 billion).
According to preliminary figures, total assets in 2005 increased by 6.8 % (7.9 %) to € 77 billion (€ 72.1 billion). As the bank grants its loans principally via other banks, the amounts due from banks with a share of 71.2 % (73.1 %) or € 54.8 billion (€ 52.7 billion) are of major importance within the balance sheet. In addition to the loan portfolio, the securities portfolio contributed to the growth of total assets. Due to a higher demand for securitised lending, the securities portfolio rose by 16.8 % (5.5 %) to € 20.2 billion (€ 17.3 billion).
To refinance its lending business, the agency raised medium and long-term funds in 2005 amounting to € 10 billion (€ 11.3 billion), € 5.7 billion (€ 6.5 billion) of which was drawn from its Euro Medium Term Note Programme (EMTN). The issuance of global bonds registered with the Securities and Exchange Commission (SEC) accounted for € 2.6 billion (€ 2.7 billion). Once again issues under the Australian Dollar Medium Term Note Programme amounting to € 1.2 billion (€ 1.1 billion) contributed considerably to medium and long-term funding. At the balance sheet date, medium and long-term external funds reached a total of € 62.6 billion (€ 57.6 billion).
The cost and earnings situation was again positively affected by favourable refinancing conditions in domestic and international financial markets in 2005. Tight cost management and an increased loan volume also affected the earnings situation positively and thereby enabled the bank to increase its promotional activities. Net interest income rose by 4.6 % (7.5 %) to € 219.5 million (€ 209.9 million). The cost-income ratio of 17.1 % (17.8 %) could once again be improved. After deduction of administrative expenses, the Board of Managing Directors is expecting an operating result (before risk provisions and net valuation adjustments) of € 182.1 million (€ 172.4 million) for 2005. Net income for the year is expected to reach € 40 million (€ 38 million) of which € 30 million (€ 28.5 million) will be added to revenue reserves. Liable capital will be further strengthened by an amount of € 90 million being allocated to the fund covering general banking risks.
In the 2005 balance sheet, total capital amounts to € 2,624.7 million (€ 2,733.1 million). This is made up of the capital stock of € 135 million, revenue reserves of € 624.7 million (€ 594.7 million) and the fund covering general banking risks of € 890 million (€ 800 million). Total capital in the balance sheet also includes subordinated liabilities, which decreased in 2005 to € 975 million (€ 1,203.4 million) due to maturities. Core capital ratio at 10.6 % (9.7 %) and total capital ratio at 16.7 % (15.2 %) are well above the legal requirement of 4 % and 8 %, respectively.
Forward-Looking Statements: This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of Rentenbank's management and currently available information. Such statements include, in particular, statements about our plans, strategies and prospects. Words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", variations of such words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. Except as required by law, Rentenbank does not have any intention or obligation to update publicly any forward-looking statements after they are made, whether as a result of new information, future events or otherwise.